New Study: The Top 10 Best Practices of High-Impact HR Organizations

Few magazine articles have had such a monumental impact on an entire profession the way that Fast Company’s“Why We Hate HR” did on the world of Human Resources after it was published back in 2005.

Not only was it discussed, debated, and argued about about ad infinitum(and still is, some would say), but it articulated the notion that strategic, high-value HR executives should have a “seat at the table” with an organization’s other high level leaders, but, that this was simply a pipe dream for many in HR.

Though controversial and full of assertions that were hard to face, the article summed up important frustrations that were common among HR professionals at the time. Many were forced to acknowledge its validity, to pause and to wonder, “Okay. But where does HR go from here?”

In the years since, HR leaders have fought an uphill battle to change the profession. Today, smart companies do have a place at the table for HR. The challenge for HR now is in living up to the high expectations that come with the seat – expectations of high impact. It is not easy…

With this new report, we tie together past research in the areas of talent and learning, and brand new research on the strategic elements of HR we have found that hold the greatest challenges for the function today.”

HR organizations lack the skills to succeed

The bottom line to the new Bersin research is pretty simple: it shows that many HR organizations still lack the skills they need to succeed in 2011. The study, which included surveys and interviews with more than 720 global organizations, found that overall spending levels, organization structure, and team size have far less impact on business performance than the skills of the HR professionals themselves.

“This research clearly shows that the days of bloated HR organizations focused on administrative tasks are over,” said Josh Bersin, chief executive officer and president of Bersin & Associates. “Lean, technology-enabled, well-trained HR teams are able to take advantage of modern talent practices and partner with business leaders to drive impact.”

The research also makes the case that the decades-old “HR generalist” model is no longer effective unless the HR generalists are highly trained and connected to senior business leaders. That sounds like a contradiction to me, but the study also points out that the key HR competencies that drive results today are familiarity with integrated talent management, understanding of workforce planning, and comfort with social networking and HR technology.

Top 10 HR Best Practices

What I found most compelling in the survey was the list of the Top 10 HR Best Practices that produced the highest impact ratings out of all of the 140 HR practices and features that Bersin evaluated. See if you agree that this is a list that makes a lot of sense:

Structured governance and business case development (HR impact opportunity — 39%). From Bersin:“Building a business case requires a clear understanding of the business or businesses that HR serves, as well as working relationships with all business leaders. HR can achieve both by involving business leaders in the planning processes and governance. This involvement also helps to ensure business alignment and, as a result of that alignment, business buy-in and support.”

Developing advanced workforce planning capabilities (HR impact opportunity — 28%). From Bersin: “High-impact HR organizations incorporate sophisticated forecasting and workforce analytics into their processes. This enables them to translate company-wide talent, business data and external workforce segment data into workable insights that they can use and share with business leaders.”

Implementing the “right” HR philosophies (HR impact opportunity — 27%). From Bersin: “High-impact HR organizations tend to commit themselves to creating work environments that enable employees to thrive both as individuals and as contributors to business success. They strive to create positive employee environments, and clearly communicate these expectations in the HR philosophy and mission. The most effective philosophies focus on fostering innovation and collaboration, or creating the best place to work, while the least effective philosophies focus narrowly on efficiency or cost-cutting efforts.”

Reducing administrative work for HR business partners (HR impact opportunity — 25%). From Bersin: “Many HR functions have a role that is a liaison between the HR function and business leaders. The specifics of this role vary widely. High-impact HR organizations use it to advise senior business leaders, focusing on decision support, workforce planning, leadership development and executive coaching. By enlisting the right person, HR can improve its credibility across the enterprise, improve working relationships with business leaders, cultivate mutual understanding and gain influence. When this role is implemented poorly, with more focus on administrative duties and taking orders, our research found that it can actually reduce an HR function’s ability to work effectively and efficiently.”

Implementing flexible HR organization design (HR impact opportunity — 20%). From Bersin: “High-impact HR organizations are flexible and agile. Like earthquake- proof buildings, they are structured to allow adaptive movement if the ground shifts. No overall HR structural model (centralized, decentralized or a combination of the two) in itself emerged as a predictor of HR success. But certain structural features do lend themselves to areas of excellence. One feature that we found to be universally valuable was flexibility. Fancy organization charts and designs are fine – provided that you also have a culture which recognizes the need to adapt structurally when business needs and challenges change, as well as an HR staff that is capable of making those changes.”

Improving employee-facing HR systems (HR impact opportunity — 19%). From Bersin: “The most significant contributions to the overall effectiveness of an HR function come from community-building and self-service elements. Knowledge-sharing portals, web-based recruitment tools and management dashboards let various HR stakeholders and clients find what they need when they need it. HR functions with user-friendly client systems are regarded as twice as effective and efficient as functions that do not invest in this advantage.”

Measuring both HR operational and business metrics (HR impact opportunity — 19%). From Bersin: “Measurement strategies in high-impact HR organizations have evolved to ensure efficiency, effectiveness and business alignment. Such strategies incorporate both operational measures by which to manage the HR function and strategic people measures to support crucial business decisions.”

Developing internal HR skills (HR impact opportunity — 13%). From Bersin: “As they focus on programs to develop employees company-wide, HR organizations often neglect the development of their own team members. This is a mistake. The world of HR solutions is constantly changing. High-impact HR organizations must invest the time and money needed to ensure team members’ competence grows in such disciplines as change management and relationship management. Efforts must also focus on developing team members’ business acumen, industry knowledge and command of current best practices in all areas of talent management, as well as the use of social networking tools and other HR technology.”

Improving line manager capabilities (HR impact opportunity — 10%). From Bersin: “A common pitfall for many HR functions is the attempt to meet the needs of every stakeholder directly, thereby spreading limited HR resources very thinly. High-impact HR functions have prioritized the focus of their HR resources on building the capabilities of their line managers. This decision allows them to work in partnership with their line managers, versus trying to work around line managers who may be incompetent or ill-prepared.

Outsourcing HR services strategically (HR impact opportunity — 10%). From Bersin: “High-impact HR organizations use outsourcing to enable their internal teams to focus on things that cannot be outsourced, such as building business relationships and developing custom solutions for business managers. These organizations outsource areas that can be improved through economies of scale, or which require global coordination and expertise. What an organization outsources often depends on its level of maturity.”

Seat at the table = high expectations

The research study comes out of Bersin & Associates’ new HR Practice, which was recently launched, the company says, to “address long-standing requests from HR professionals to help them build their skills, and prioritize and align their HR strategies with the business to deliver the greatest return.”

“The challenge for HR professionals today is living up to the high expectations that come with a seat at the table — expectations to drive business results through people and culture,” said Bersin’s Harris. “Our new HR Practice and this particular body of research reveal the keys to driving impact. We are also addressing long-standing requests by our Bersin & Associates members to help them prioritize and align their HR strategies with the business to deliver the greatest return.”

I’m not sure how the HR Practice will go for Bersin, but if it performs like other parts of the Bersin organization, it should give all the other HR consultants a good run for their money.

In fact, just this list of the Top 10 best HR Practices is a great start because it clearly gets to the heart of what HR needs to be doing to add value to an organization. And if you have spent much time around HR, you know that just about everyone needs to focus a lot more on that.

John Hollon is Vice President for Editorial of TLNT.com, and the former Editor of Workforce Management magazine and workforce.com. An award-winning journalist, John has written extensively about HR, talent management, leadership, and smart business practices. Contact him at john@tlnt.com, and follow him on Twitter at http://twitter.com/johnhollon.

Hi — Bersin & Co. does great work, but the challenge is that there are no findings here that don’t mirror what we’ve been hearing for years. Why is there still such a huge gap between what executives think about HR’s effectiveness and what we in HR think about it (see BCG’s recent study for a great graphic)? I’d suggest that most of us in HR know the right things to do — we just aren’t able to get them done. That’s likely about 50% a capability issue (lack of business knowledge, functional expertise and influencing skills) and 50% a process issue (we’ve made the processes for achieving those 10 suggestions so complex that no reasonable manager will use them.)

I know it’s the season for issuing reports like these, but it’s a bit frustrating that the research findings for this decade are the same as for the last. We can blow up these 10 if we radically simplify our HR and talent building practices so that they’re actually usable, AND we meaningfully raise the capability level of the average HR team member.

Ronald-thomas

John, great recap of the Bersin research.

As Marc alluded in his comment, there are so many of these type reports relating to HR an its relevance in the organization. They all say to HR, you got to get it on.

The resurgence of the economy and other factors have created the perfect intersection to begin this process. If HR lets this opportunity pass, it will be like the late Don Meredith would always sing at the end of a football game. “Turn out the lights, the party’s over”.

Neldondemke

I think that getting to the table and having an influence on the strategic mission and HR capital plan that aligns to that mission requires a different HR mindset. It requires some operational knowledge, strategic planning and tactical implementation; it requires business intelligence and how to maximize new technologies like SEO and applicant management, build the bench and leadership development. I’ve seen many times where the HR profession is criticized for being the gatekeepers or the obstacles to getting considered. In their attempt to satisfy their hiring managers they ignore their customers who someday may be their business partners.

Jazzpiano

I agree that Bersin’s reserch findings are interesting, but will change next year and the year after and only add more confusion to the HR profession. Look we all know that many HR folks are not “business oriented” and we can lament that all we want. However what is missing in this dialogue is this. If HR is to be considered a ‘profession’ than we have to mimic the other known professions, engineering, accounting, medicine and legal. What do they do that creates a recognized profession? First a agreed upon college curriculum, secondly, a degree at the end that reqires valadation such as the bar exam. an internship, a CPA, etc. Next, there are professional standards and guidelines in terms of how the profession recognizes advancements and practices in the worldkplacee. including a body of work codified by such organizations and medical, legal and accounting principles (FASB). None of these exist in HR with the exception of the SHRM/HRCI process . In the end, until colleges begin to produce quality graduates with the recognizsed trainiining and employers require the education and certification of credentials will employers hire those they can trust. Today, 50 percent of all individuals working in HR come from other dcilines, they also come with a wide diversity of experience. If we continue to believe that we can train anybody to work in HR, then all is lost. We we continue to experiement, conduct useless research and keep pondering our fate. As a friend, John Sullivnan from SFS said “Hr needs to change its DNA./” He is right of course.. Untile we get our act together and get agreedment on what HR really is and what it should be, frustratrations will continue to occur. I have stated all this in my paper of a couple of years ago published by the OD Journal. Let’s hope that the future of HR is brighter than it is today.

Carol Anderson

All of the prior comments seem to say that there is a long way to go for HR. I agree. As someone who transitioned from traditional HR to Learning & Development, what seems to be missing in the HR curriculum is the real work of organizational development and change. In order to be perceived as adding value rather than adding work, it would make sense to learn and practice within the field of learning.

Yes, minimize compliance and admin work, absolutely Yes to creating a employee-user experience for effective data and business intelligence, but also be prepared to help teams, leaders and the organization as a whole identify the right skills, effectively build those skills, measure the growth of skill, and demonstrate that HR is actually contributing to the forward movement of the organization.

I have watched, in two separate organizations, HR think that they know learning & development, only to offer solutions to problems that haven’t been confirmed. This is making work without adding value.

I have also watched disciplines like six sigma, LEAN, process improvement evolve because they are doing what, in my opinion, HR should have been doing all along – helping leaders and employees first identify the right problem, do the work they were hired to do effectively, measure and report on the effectiveness. These disciplines use the theories of organization development to improve work – HR could add this as an arrow in their quiver, but I don’t see them moving past the administrative tasks of hiring, making sure performance appraisals are completed so that managers can fire those who aren’t doing the work.

It isn’t about firing them. It’s about growing them and this takes leaders who know how to do that, and do it well. In my opinion, this is where HR falls short.

As an ex-HR practitioner, I can tell you that what I saw in my 25 plus HR career years is very well reflected in your study. However; I will also tell you that with only one exception, my career was always in global corporations. That corresponds to your survey database.

What I would say today about HR are the following:

1.) Government programs, policies and legislation increasingly has forced HR into the enforcement/transaction corner. I do not see that getting better here in the US or in Europe.
2.) Smaller businesses (Less than $300 MM USD gross annual revenue) care a great deal about practices #1 and #2 and very little about the others. Smaller businesses are where the employment growth is occurring. Large Global corporations are determined to make it work with what they already have.

HR leaders today need to be aware that there are great opportunities in the less than $300MM firms but the landscape is different than you have portrayed. Keep working this. If you have a chance to talk to some of the smaller organizations, I think your readers will be well served.

Human Capital

Thank you so much for this post, I really wish I had read this a few months ago, because I had a website that I worked on so hard for some time to get it ranking good.

http://www.onlineincomemethods.com/ Hasan Shahzad

Very well explained. In today’s modern world, how the HR policies help the employees to make them expert in their specific field and help them increase their remuneration / income?